SME Equity Financing Atlas A glimpse of key global trends in SME equity financing

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1 SME Equity Financing Atlas A glimpse of key global trends in SME equity financing December 2016 Executive summary

2 We produced our first SME Equity Financing Atlas Our objective To generate a comprehensive overview of growthfocused equity investments in young and innovative SMEs worldwide (as well as for a few specific regions/sectors). What we did We analysed all investments in SMEs from (based on Pitchbook & World Bank data), covering: 52,614 companies that employ less than 250 persons; 81,141 deals with a known deal size under EUR 500m 33,490 equity investors including VC deals and PE growth & expansion deals from all investor types (angels, venture capital funds, family offices, etc.); excluding secondary market transactions (buy-outs, buy-ins, M&As). 2 PwC s Accelerator

3 Here are some of our key findings SME Equity Financing Atlas

4 Capital investments in SMEs have more than doubled in five years Year to Year perspective Number of deals closed Capital invested in EUR bn 20,000 18,686 18, ,426 15,000 13, ,453 10,000 8, , PwC s Accelerator

5 While new categories of investors have emerged, PE still accounts for the highest portion of capital invested Growth in deals (by investor type) 100% 80% 60% 40% 20% 0% 3% 3% 29% 16% 6% 5% 39% 40% 17% 6% 17% 19% Government oruniversities PE growth/expansion or mezzanine fund Corporate VC Venture capital firms Accelerators & incubators Angel (group & individual) & family office Capital invested by investor type over the period % 3% 10% 41% PE growth/expansion or mezzanine fund Venture capital firms Angel (group & individual) & family office Corporate VC Accelerators & incubators 36% SME Equity Financing Atlas

6 As a result of capital inflows, ticket sizes have increased at all stages of investment Average ticket size per series in EUR m Seed Series A Series B Series C 6 PwC s Accelerator

7 but not as much as pre-money valuations Pre-money valuation median by ticket size k % k - 0.9M % M - 4.9M % 5M - 9.9M % 10M M % > 25M % SME Equity Financing Atlas

8 resulting in increased dilution for investors % of ownership by investors 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% Seed Series A Series B Series C Series D Series E % 5.00% 0.00% PwC s Accelerator

9 Investments in IT have increased since 2010 and represent 32% of total (from 21%) Capital invested in EUR m 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Information Technology Consumer Products & Services Heathcare Business products & Services Energy Financial Services Materials & Resources SME Equity Financing Atlas

10 SaaS and Mobile dominate the list of hot investment areas (in amount of deals) SaaS Mobile Manufacturing Life Sciences E-Commerce FinTech Big Data CleanTech HealthTech LOHAS & Wellness Oncology EdTech Marketing Tech Internet of Things Security AdTech Wearables & quantified self Robotics and Drones Nano-technology 3D printing Infrastructure PwC s Accelerator

11 Less than half of the VC/PE backed SMEs have an exit after 10 years (almost 90% via M&A) 1,182 SMEs raised their first Seed or Series A money from equity investors worldwide in 2005 Status in 2015 IPO & current enterprise Value > 1b EUR IPO & current enterprise Value < 1 b EUR No of companies % (of 1,182 companies) % % Were aquired or merged % Are generating revenue and have > 15 employees Are generating revenue and have < 15 employees Are still in clinical trials/ product development Out of Business or bankruptcy/liquidation % % % % Valuation % 0-10M 34% 10M - 20M 13% 20-50M 16% M 13% > 100M 24% For European SMEs that exited via M&A: 33.5% of SMEs likely achieved a positive exit (IPO/ trade sale >10M) Only 5.1% of exits through an IPO 35% were bought by US companies and 10% by Asian companies SME Equity Financing Atlas

12 Not surprisingly, seed is the most dangerous stage for investors, as nearly 50% do not make the next round % of these companies that received equity financing in follow up Series (until 2015) till Series A till Series B till Series C till Series D till No Series E+ follow-up 51.8% 39.6% 19.3% 12.0% 3.7% 48.2% Source: PitchBook Inc. 12 PwC s Accelerator

13 For more detailed and regular updates on SMEs & SME equity financing, please visit PwC s Accelerator can help For a deeper discussion on these results, please contact us. Connect PwC's Accelerator 2, Gerhard Mercator BP 1443 L-1014 Luxembourg Follow us on Linkedin Laurent Probst Network Global Leader, PwC s Accelerator laurent.probst@lu.pwc.com Cyrille Foillard Managing Director, PwC s Accelerator cyrille.foillard@lu.pwc.com SME Equity Financing Atlas

14 PwC Luxembourg ( is the largest professional services firm in Luxembourg with 2,700 people employed from 58 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach. The PwC global network is the largest provider of professional services in the audit, tax and management consultancy sectors. We re a network of independent firms based in 157 countries and employing over 223,000 people. Talk to us about your concerns and find out more by visiting us at and PwC s Accelerator PwC s Accelerator is a PwC initiative aimed at assisting fast growing technology companies go global faster and smarter, through tailored services and a privileged access to the PwC network of member firms of PricewaterhouseCoopers International Limited (each of which is a separate legal entity) and to global ecosystem of partners, investors and clients PricewaterhouseCoopers, Société coopérative. All rights reserved. In this document, PwC Luxembourg refers to PricewaterhouseCoopers, Société coopérative (Luxembourg) which is a member firm of PricewaterhouseCoopers International Limited ( PwC IL ), each member firm of which is a separate and independent legal entity. PwC IL cannot be held liable in any way for the acts or omissions of its member firms.